Apollo Global Management is betting on a strong return from business conventions once the coronavirus pandemic subsides, a belief reflected in its recent deal with the Las Vegas Sands, according to David Sambur, the company’s leading private equity partner.
Announced on Wednesday, Sands said it would sell the Venetian, Palazzo and Sands Expo and Convention Center properties in Las Vegas to Vici Properties for $ 4 billion. Apollo Global is buying the operations for $ 2.25 billion.
“Some may say that the convention business could be stronger in a post-Covid world, because you have distributed workforces that spend less time together,” Sambur told CNBC’s Leslie Picker on “The Exchange.” “The business case for meeting once a year, twice a year, four times a year to get people together can really be stronger.”
Travel in general was hampered by the Covid pandemic, but there is growing optimism about a recovery as vaccines are implemented. However, many observers believe that leisure travel will come roaring long before corporate travel, in part due to the ubiquity now of video conferencing services like Zoom.
For example, a recent report by the American Hotel & Lodging Association said that “demand for business travel is not expected to return to 2019 levels until 2023.” In addition, Bill Gates, a billionaire co-founder at Microsoft, predicted last fall that more than 50% of business travel will be put aside after the pandemic, as companies adopt a “very high limit” for travel.
Entrance to the Sands Expo and Convention Center in Las Vegas, Nevada.
George Rose | Getty Images
But when it comes to large company conventions, specifically, the outlook may be different from a small group of employees flying into a city for one or two meetings. As Sambur noted, an increasing number of companies are giving employees greater geographical flexibility, even after the end of the Covid crisis, potentially increasing the desire to hold a few large meetings a year while more work is done remotely.
“Traditionally, business travel has been about corporate profits and the stock market, which … are doing really well,” added Sambur, who took his current role at Apollo Global in September 2019.
As the New York-based company analyzed the details of a deal with Sands, Sambur said it found reasons to have a positive outlook.
“The other thing that we were able to do as part of our endeavor was to really look at the business that is in the books for the next three or four years, because the convention deals are launched several years in advance,” he said. “We were able to speak with several customers and get an idea of their travel plans and, based on that work, we were comfortable with the fact that people were coming back to the conventions.”
Apollo Global is taking a more optimistic view of overall travel recovery, said Sambur, pointing to the company’s investment in Expedia last year, among others. Sambur joined the board of directors of the online travel company.
“We have been among the most active in terms of expressing the opinion that once people are comfortable and feel safe enough to do this, they will resume their previous behaviors,” he said.
Also on Wednesday, Apollo Global announced a $ 3.3 billion deal to make craft retailer Michaels private.
Apollo Global shares ended Wednesday with an increase of almost 1%, at $ 50.41 each.